Apple's worldwide share of PC market now 3.2 percent - report

Record-setting shipments of more than 2 million Mac systems during Apple Inc.'s fourth fiscal quarter of 2007 has pushed its share of the worldwide PC market ahead another 200 basis points to 3.2 percent, according to investment bank Piper Jaffray.

Mac worldwide share

"Apple shipped 2.16 million Macs in the September quarter [and] IDC estimates that 66.85 million PCs were shipped worldwide in the September quarter," analyst Gene Munster wrote in a research note to clients Tuesday. "Therefore, Apple's market share rose to 3.2 percent."

The Cupertino-based firm's slice of the global computer market has risen from 2.5 percent in March -- just six months ago -- helped by strength in its notebook systems and the recent introduction of redesigned all-in-one iMacs.

Munster told clients that he expects the trend of Mac market share growth will continue due to a combination of factors presently coming together, including the iPod and iPhone halo effect, a new operating system, a strong direct sales channel, and a strong brand awareness among others.

"Mac market share is at a historic high, and on October 26 Apple will release a new version of its operating system, Mac OS X Leopard," he wrote. "In itself, we believe Leopard's sales performance will be similar to that of Tiger; adjusted for the larger Mac OS X user base of approximately 23 million, we expect Leopard to add approximately $240 million [in revenues] to the December quarter."

But more importantly, Munster said, he believes Mac OS X is a meaningful factor in the decision to buy a Mac. As such, he sees the software helping Apple continue to increase its share gains at a measured pace over the next several years.

AT&T rev share payments

Meanwhile, the Piper Jaffray analyst also used his research note Tuesday to delve further in to the mystery surrounding the percent of service revenues from iPhone customers that AT&T is sharing with Apple under the pair's exclusive carrier agreement.

Apple said Monday that its "iPhone and Related Products And Services" totaled $118 million for its fiscal fourth quarter, a large portion of which is believed to be the company's share of the service fees from AT&T.

"We believe this equates to $18/sub/month factoring in Apple's estimate of approximately 250,000 iPhones that were sold to be unlocked to operate on a carrier other than AT&T (unlocked iPhones do not contribute to the revenue sharing totals," Munster explained.

Fiscal Q1 2008 guidance

The analyst also told clients that he was surprised by Apple's guidance for its current December quarter -- its first fiscal quarter of 2008 -- which was significantly above Wall Street's consensus estimates at per-share earnings of $1.42 on sales of $9.2 billion.

"With Apple becoming notorious for providing overly conservative guidance, the biggest surprise of the quarter may be that the December quarter outlook was ahead of Street consensus," he wrote. "Apple's product lineup for this holiday season is undoubtedly its strongest ever and we believe this will allow the company to achieve and likely exceed expectations."

Apple has typically beat its own guidance by an average of 9 percent over the past 11 quarters, the analyst explained, but said that scenario seems unlikely for the December quarter.

Munster maintained his "Outperform" rating on shares of Apple, raising his price target once again from $211 to $222.

While I agree the Mac shouldn't be considered like a dumbed-down PC...it's still being treated as a PC in market share figures.

But while it *is* being treated as a PC, the worldwide market share figures give people little information about anything. The commodity PC is spreading to developing countries rapidly. These bargain-bin PCs are becoming affordable to new classes of people in these countries. These people, however, will probably not be able to afford the software to go with the computer they've bought...nor would they have to buy it since these countries normally openly pirate software.

If software developers go with the worldwide market share numbers to decide whether it's viable to develop for Mac, they're targeting a large chunk of people in the 'Under 2000' and '2000-9999' category who would never buy software in the first place (they would use the software that comes with Windows and possibly pirate everything else). The recent PC growth is not representative of potential sales since most households in North America and in parts of Europe already have a computer. The growth is attributed to developing country populations that can now barely afford a computer.

Software developers, game companies, and analysts should be able to catch on that North Americans, Europeans and Australians are the ones that will be forking over the dough for software. In this category of people, Apple is doing surprisingly well.

Let's hypothesize that one day Apple reaches 50% market share (a gross exaggeration obviously) in North America and Europe but that worldwide market share remains a low 7.5% because cheap PCs have flooded Asian and South American countries and, overall, the number of Macs out there is still quite small. Would it make sense to solely target software at PC users? If developers don't mind selling their software at lower prices in those countries or if they outright don't care that their software gets stolen, perhaps. But rationally, it makes more sense to target the population that will pay for the software. And in this example, that population is made up of an equal amount of Mac and PC users.

So when analysts and doomsayers mention worldwide market share figures, one has to wonder what they're really trying to convey. Because the number doesn't mean a whole lot.

While I agree the Mac shouldn't be considered like a dumbed-down PC...it's still being treated as a PC in market share figures.

But while it *is* being treated as a PC, the worldwide market share figures give people little information about anything. The commodity PC is spreading to developing countries rapidly. These bargain-bin PCs are becoming affordable to new classes of people in these countries. These people, however, will probably not be able to afford the software to go with the computer they've bought...nor would they have to buy it since these countries normally openly pirate software.

If software developers go with the worldwide market share numbers to decide whether it's viable to develop for Mac, they're targeting a large chunk of people in the 'Under 2000' and '2000-9999' category who would never buy software in the first place (they would use the software that comes with Windows and possibly pirate everything else). The recent PC growth is not representative of potential sales since most households in North America and in parts of Europe already have a computer. The growth is attributed to developing country populations that can now barely afford a computer.

Software developers, game companies, and analysts should be able to catch on that North Americans, Europeans and Australians are the ones that will be forking over the dough for software. In this category of people, Apple is doing surprisingly well.

Let's hypothesize that one day Apple reaches 50% market share (a gross exaggeration obviously) in North America and Europe but that worldwide market share remains a low 7.5% because cheap PCs have flooded Asian and South American countries and, overall, the number of Macs out there is still quite small. Would it make sense to solely target software at PC users? If developers don't mind selling their software at lower prices in those countries or if they outright don't care that their software gets stolen, perhaps. But rationally, it makes more sense to target the population that will pay for the software. And in this example, that population is made up of an equal amount of Mac and PC users.

So when analysts and doomsayers mention worldwide market share figures, one has to wonder what they're really trying to convey. Because the number doesn't mean a whole lot.

Those are good points that I try to make as well. Linux people also try to make their own marketshare seem much more than the estimated under 1% it actually commands.

They use machines sold in China and other 3rd world marketsas examples, where the machines are usually sold with Linux, but are soon stripped of it for the Windows and Office suites they bought right outside of the computer store from a guy who sells them the DVD for $2.

Those are good points that I try to make as well. Linux people also try to make their own marketshare seem much more than the estimated under 1% it actually commands.

They use machines sold in China and other 3rd world marketsas examples, where the machines are usually sold with Linux, but are soon stripped of it for the Windows and Office suites they bought right outside of the computer store from a guy who sells them the DVD for $2.

Precisely. I don't really care if the developers don't act more intelligently about this today because this type of thing usually gets sorted out eventually when the situation becomes blatantly obvious. They'll eventually realize that their sales are dropping and wonder why this is happening when the worldwide market share hasn't changed but then they'll start catching on that the meaningful market shares are not the worldwide numbers but, rather, the North America, European, and Australian numbers. With their new perspective, they'll understand that the Mac market has eaten up into the meaningful shares reducing the number of PC users that would actually buy software and explain why sales have dropped.

These developers will simply have lost an opportunity to capitalize on a young, growing market. No biggie. Sad, but not the end of the world. Those that are intelligent with their analysis of the market and act today while the Mac market is growing will really reap the rewards.

Precisely. I don't really care if the developers don't act more intelligently about this today because this type of thing usually gets sorted out eventually when the situation becomes blatantly obvious. They'll eventually realize that their sales are dropping and wonder why this is happening when the worldwide market share hasn't changed but then they'll start catching on that the meaningful market shares are not the worldwide numbers but, rather, the North America, European, and Australian numbers.

But even then, that is still the wrong number. It's installed base that should matter, not anything else.

The sad fact of the situation is that the easiest number to work out, and most accurate (even though it's an unhelpful number) is worldwide market share, and it would seem that that is what most developers go by.

Sort of a related topic. What do you guys think of Linux's push for the desktop? Recently Ubuntu released a new version of their desktop os and I've read it's nice and actually a viable alternative to Windows and OSX. Also there now is some interest in pc makers in offering it to customers as Dell now gives customers the option of preloading it on some of their machines.

But even then, that is still the wrong number. It's installed base that should matter, not anything else.

Even more helpful statistics are "home user installed base" and "business user installed base". Lots of Windows PCs are running point of sale terminals, ATMs, video display signs, machinery, who knows what... While that's good for the manufacturers of those computers and for Microsoft, it's in no way useful for software manufacturers (nobody's gonna be buying Photoshop or Halo or Quicken or downloading songs from iTunes for those computers) and it's not gonna impact visitors to websites.

What are the *real* numbers or computers *being used by people* as personal computers? I would assume Macs have a much larger home-user market share than this study implies.

Actually, both should matter -- one is a level variable, and the other a flow that shows trends.

That said, given the nature of obsolescence in the PC market, there will likely be a high correlation between the two numbers. People are just using one as a proxy for the other.

Is there any significant, non-anecdotal evidence that Macs are used longer on average? I've seen Apple fans protest the use of market share, but I haven't seen anything to suggest that the Mac installed base is disproportionate to the Mac market share in notable or significant terms.

But even then, that is still the wrong number. It's installed base that should matter, not anything else.

The sad fact of the situation is that the easiest number to work out, and most accurate (even though it's an unhelpful number) is worldwide market share, and it would seem that that is what most developers go by.

Installed base isn't considered to be that important when considering software sales.

The reason for that is because most people buy most of their software when they buy their computers. After that short period, software purchases trail off. Most people don't even upgrade their software until they replace their machine with a new one.

Sort of a related topic. What do you guys think of Linux's push for the desktop? Recently Ubuntu released a new version of their desktop os and I've read it's nice and actually a viable alternative to Windows and OSX. Also there now is some interest in pc makers in offering it to customers as Dell now gives customers the option of preloading it on some of their machines.

Not much. They still don't get it. There is no coordination between the major distro's. What will work on one, often doesn't work on another.

The GUI's are completely different. There is a breakdown between the lead developers and their teams, and their users. The big Distro's are running two to three years late on their promised major version upgrades.

There are not nearly enough drivers for many common hardware types of equipment.

Little mainstream software.

There is no central place to go to for support that will take responsibility.

No warranties, no guarantees. Dell offers NO support for it and charges for the OS, though it's less than they charge for Windows. A $50 difference in price.

Not at my fingertips. but there were studies done about that issue seeral years ago. It was very interesting.

Don't make the mistake that's so often made on tech forums to think that you are even close to the average compouter buyer. The fact that we are on these forums shows that we have little in common with most of them.

I read an article the other day that said that one reason Macs appeal to so many these days is that most all of the software most people will ever need comes with the machine.

Those are good points that I try to make as well. Linux people also try to make their own marketshare seem much more than the estimated under 1% it actually commands.

They use machines sold in China and other 3rd world marketsas examples, where the machines are usually sold with Linux, but are soon stripped of it for the Windows and Office suites they bought right outside of the computer store from a guy who sells them the DVD for $2.

I have 3 systems that once ran XP and now run Linux, plus one Mac and a recent Linux machine purchase. I'm adding another Mac come January.

To the world, I've currently purchased 1 Mac and 1 Linux box and 3 Windows boxes.

Market share is never going to be accurate for Linux. You don't buy them pre-installed with your hardware until recently Dell and HP got on the bandwagon.

I would imagine amongst developers they talk to each other and know where the money is.

Sometimes in articles you'll see little facts that show how important the platform is and how much money the Mac makes for developers. No one seems to emphasis these numbers.

I've seen that as much as 40% of Adobe's professional products are sold to Mac users. Avid sells 60% of its professional products to Mac users. Adobe and Avid would loose significant amount of revenue if Mac users stopped buying their software. These are facts that are rarely pointed out.

Hmm... I'm thinking there will be a correction sometime after the holiday season and MacWorld. Unless, the AppleTV is seriously made-over and Apple intro's their own navigation/entertainment system. There's no doubt their stock will hit above $200 a share before the end of the year.

Hmm... I'm thinking there will be a correction sometime after the holiday season and MacWorld. Unless, the AppleTV is seriously made-over and Apple intro's their own navigation/entertainment system. There's no doubt their stock will hit above $200 a share before the end of the year.

Well, if they carry on at the current growth rate (i.e. 30+%/pa) it'll be 2-3 years
(if MS continues to flat-line)